The company said the launch was a new milestone in its innovation in the ETF market and its smart index funds will offer a more efficient and less volatile alternative to traditional market cap-weighted indices.
Of the two products that have launched so far, one is a risk-weighted Eurostoxx 50 Index, with a fee of 25bps and one is a risk-weighted World Index, with a fee of 45bps.
Lyxor is the latest in a spate of French providers to enter the "smart beta" space, for more read our analysis on the topic.
Risk-weighted indices are seen as two steps on from market-cap weighted indices. For example, in the first step the index would be equally weighted so that all 50 stocks in the Eurostoxx will have the same weighting – 2% each as opposed to market-cap weighting.
The disadvantage of this is that some stocks are more volatile than others and contribute more to risk. So in the second step, instead of equally weighting, every stock is weighted so it contributes equally to the risk of the fund.
An ETF buyer told Portfolio Adviser: "Independent research has shown this approach can add a little bit of outperformance over time and reduce volatility when compared to traditional market cap weightings. It is an interesting development and appears to be quite keenly priced, often you have to pay a premium over traditional market cap weighted indices to access these strategies, although there may be swap fees on top."
Lyxor concluded: “Through these ETFs, investors can now benefit from indexing strategies that put risk management at the centre of portfolio construction.”
